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The new laws for regulating cryptocurrencies in Japan will be enforced next month.
The Japanese House of Representatives passed two legislations last year to regulate crypto, the Payment Services Act (PSA) and Financial Instruments and Exchange Act (FIEA). It was initially expected to take effect in April. However, there were unexpected delays and there was no official enforcement date announced until last week, Cointelegraph reported.
In the official government newsletter on April 3, it was announced that the revised versions of PSA and FIEA would take effect on May 1. Some of the changes in PSA includes basic terminology like “crypto asset” instead of “virtual currency.”
Crypto exchanges operating in Japan from May 1 will need to manage its users’ money separately from their own cash flows. Thus, they will be required to find a third-party operator and use reliable methods like cold wallets.
Should the exchanges insist on using hot wallets, they will be required to hold “the same kind and the same quantities of crypto assets” to reimburse their customers in the event of theft.
Meanwhile, the FIEA revisions include the concept of electronically recorded transferable rights (ERTRs) to define initial coin offerings (ICOs) and the regulation of security token offerings (STOs). Also, crypto derivatives are unregulated in the country but it will be regulated under FIEA starting May 1.
FIEA also discouraged anyone from engaging in activities such as dissemination of rumors, or the use of fraudulent means to sell, purchase, or engage in any crypto asset or derivatives transaction. The revisions in FIEA and PSA will make Japan a safe haven for crypto.
Prior to this, Mihir Sharma of Cryptopolitan reported that Asia has a massive potential to be the next crypto hub. Aside from Japan, Singapore, India and South Korea have developed a good reputation in the crypto sphere especially after the “very strict implementation” of crypto regulations like 5AMLD in Europe.
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